Question 1. We assume that a firm is in a perfectly competitive
industry. The relations between the firm’s total cost (T C),
marginal cost (MC) and quantity produced
(Q) are given by:
T C=$1,000,000+$20Q+$0.0001Q2
MC= ∂T C ∂Q =$20+$0.0002Q
Total cost includes a normal profit.
(1). What are the levels of optimal output and profit if price
is equal to $60 each? (5 points)
(2). If the total fixed cost is $1,000,000, check that the
firm’s marginal cost is greater...